At the beginning of September 2023, the Competition Commission of India, which is the antitrust regulator for India, announced that it would approve Vistara and Air India’s merger, subject to some voluntary commitments that were made by the airline/s. However, in the absence of a detailed order, it was unknown what these commitments were. The 73-page order just dropped, and here are the details.

Air India will maintain certain minimum operations on various domestic routes

While assessing the approval of the proposed merger, the CCI had raised competition concerns, and airlines had given commitments to assuage the regulator’s concerns.Per the detailed order, Air India Limited and Vistara overlap on 48 route pair operations inside India.  Per the commitments, Air India has voluntarily offered to maintain a “minimum capacity/ supply level” on certain overlapping O&D (Origin & Destination) domestic routes.

Air India has committed that after the merger, the Merged Entity will maintain at least a minimum annual scheduled air passenger transport capacity at IATA’s Summer 2023 capacity levels on the following routes for at least four financial years:

• Delhi – Cochin and vv route (Combined market share of 70-75% (pax travelled & offered capacity) on this route in FY23)
• Delhi – Thiruvananthapuram and vv route (Combined market share of 80-85% (pax travelled) / 70-75% (offered capacity) on this route in FY23)
• Bengaluru – Guwahati and vv route (Combined market share of 60-65% (pax travelled) / 55-60% (offered capacity) on this route in FY23)
• Bhubaneshwar – Delhi and vv route (Combined market share of 60-65% (pax travelled) / 50-55% (offered capacity) on this route in FY23)
• Amritsar – Delhi and vv route (Combined market share of 50-55% (pax travelled) / 45-50% (offered capacity) on this route in FY23)
• Bhubaneshwar – Mumbai and vv route (Combined market share of 50-55% (pax travelled) / 45-50% (offered capacity) on this route in FY23)
• Bengaluru – Delhi and vv route (Combined market share of 45-50% (pax travelled & offered capacity) on this route in FY23)

provided that the market share of the Merged Entity basis passengers flown on the relevant routes for the previous Financial Year is greater than a certain percentage (redacted) on all the above-mentioned routes.

Air India will maintain certain minimum operations on various international routes

Per the detailed order, Air India Limited/ Vistara /Singapore Airlines and Scoot overlap on 24 route pair operations outside India on a non-stop or one-stop.  Per the commitments, Air India has voluntarily offered to maintain a “minimum capacity/ supply level” on certain overlapping O&D (Origin & Destination) international routes.

Air India has committed that after the merger, the Merged Entity will maintain at least a minimum annual scheduled air passenger transport capacity at IATA’s Summer 2023 capacity levels on the following routes for at least four financial years:

• Delhi-Sydney
• Delhi-Melbourne
• Delhi-Paris (80-85% pax travelled and 55-60% capacity offered in FY23)
• Delhi-Frankfurt (85-90% pax travelled and 55-60% capacity offered in FY23)

provided that the market share of the Merged Entity basis passengers flown on the relevant routes for the previous Financial Year is greater than a certain percentage (redacted) on all the above-mentioned routes.

For the Australian routes, per CCI, there is over 40% market share in terms of passengers who flew either AI/SQ/UK or a combination on the route non-stop or one-stop.

Singapore Airlines and Air India will maintain certain minimum operations on various international routes.

Further, Air India and Singapore Airlines will maintain minimum capacity/ supply level in relation to certain overlapping O&D pairs between India and Singapore, namely:

• Delhi-Singapore
• Mumbai-Singapore
• Tiruchirappalli-Singapore
• Chennai-Singapore

Air India has committed to maintaining a minimum weekly scheduled air passenger transport capacity at the annualised QIFY24 Level on the SIN-DEL vv route. Singapore Airlines has committed to maintaining minimum weekly scheduled air passenger transport capacity at pre-COVID-19 levels on the SIN-DEL vv route.

Air India and Singapore Airlines Group have individually committed that they will maintain minimum weekly scheduled air passenger transport capacity at Pre-COVID-19 Levels on the following routes:

• Mumbai-Singapore
• Tiruchirappalli-Singapore
• Chennai-Singapore

The order noted,

The Commission notes that the voluntary capacity commitments offered by the parties seem to address the likely competition concerns that could otherwise result from the proposed combination and thus decided not to proceed further with the investigation in the matter.

Interestingly, here, if I am reading this right, the CCI wants to ensure that the airline and its investor do not pull away from these routes where it seems to be a dominant player on various routes. In other countries, there would usually be concessions to approve a merger of this nature to ensure that an airline does not become a dominant force on a route. What do I know…

Bottomline

As a part of winning the order from the CCI to be able to combine, Air India Group, Singapore Airlines Group, and Vistara have all given commitments to maintain a minimum service level on seven domestic routes, four European/Australian Routes and routes to Singapore. In all these cases, the regulator has been assured that the airlines will continue a certain minimum service level and not vanish from serving these routes.

What do you make of Vistara, Air India and Singapore Airlines’ commitments to win the approval of the competition regulator?

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